Health Assurance Network

Health Assurance Network’s Health Insurance Basic Glossary

Agent—A licensed health insurance professional that can sell health insurance. He or she may represent multiple health insurance companies. There are strict regulations placed on these people to help protect the consumer.

Archer Medical Savings Accounts—A type of individual account that can be set up by people who are self-employed or those who are employed by small companies. Money in the savings account is used to pay health or medical expenses.

Coinsurance—The amount of money a person has to pay for medical expenses once the deductible has been met. Usually, your health insurance plan will pay 80% of covered charges leaving you with the other 20%. Health insurance plans vary so you may find that your plan is a 90/10, 70/30, 60/40 or even 50/50. You should read your policy closely for details

Copay—A flat amount you have to pay every time you get medical treatment. For example, many health insurance plans have a “primary doctor office visit” copay which allows you to pay between $10 and $40 (depending on your policy) for seeing your doctor. Your health insurance company has pre-arranged with the doctors to accept this flat amount and then the insurance company will pay the remainder of the bill to the doctor based on pre-arranged amounts for every type of medical treatment.

Deductible—You will have to pay your insurance deductible before your health insurance plan will start paying. Exceptions exist if you have a copay for certain services. Usually, you don’t have to meet the deductible for services covered under the copay. Read your policy to be sure.

Disability insurance—This type of insurance will pay a benefit if you are injured or become injured and can’t work. Typically, there is a set amount of money paid directly to you each month you are disabled.

Exclusions—Sometimes this is also referred to as “limitations” and it describes the services which are NOT covered by your health insurance plan. Every health insurance plan must describe very clearly any exclusions or limitations to coverage in the literature and policy.

Fee-for-service insurance—Sometimes called a “traditional” or “indemnity” health plan. This plan design usually has a yearly deductible and then you and your health insurance company will share costs for medical expenses after you meet the deductible. Be sure to look for which treatments and services which are covered in your policy. Also, you will usually be able to acquire treatment at any hospital or use any physician you choose because this plan is a non-network type of coverage.

Flexible spending arrangements—Employees in a group health plan can use this type of account to use pre-tax dollars to pay for “qualified” medical expenses throughout the year. Be careful, if funds aren’t used then they are usually forfeited at the end of that year.

Formulary—A specific list of covered drugs from the insurance company.

Generic Drug—A “copy” of a “brand name drug”. After a particular drug has been introduced, it has a limited amount of time in can be exclusive in the market as a “brand name drug”. Once the patent has expired, other drug-making companies are allowed to duplicate the original drug which is then sold for a much less expensive price.

Group health insurance—Health insurance plans that are offered by your employer, union, association or some other authorized entity. Different rules and regulations apply to group health coverage. For example:  Typically, pre-existing conditions aren’t covered in individual health insurance but they are with group health insurance.

HMO (Health maintenance organization)—One of the three main categories of managed care. You receive medical treatment and services from participating healthcare providers listed in a network. Normally, to see a specialist, you will first have to get a referral from your primary care physician.

Health reimbursement arrangement—Sometimes an employer will setup one of these accounts to pay for an employee’s healthcare expenses. The employee can’t contribute to this type of account such as with an Health Savings Account, it is only funded by the employer.

Health savings account—A fairly new trend in the health insurance industry, this is a savings account established by an individual or the employer in which money can be put in the account on a tax-free basis to help pay for healthcare or medical expenses. The money you can put in the account each year is limited by IRS regulations but you can roll over any unused money from year to year. An HSA is usually attached to a High Deductible Health Plan.

High-deductible health plan—This type of plan will provide comprehensive coverage once you reach the set deductible in a calendar year. It is usually the insurance portion of a health savings account or health spending account and will have a cap on maximum out of pocket expenses for a given year. For example; if you have a $5000 deductible, then once you meet that deductible, the insurance company will generally pay for 100% of covered expenses after that. Be careful because not all plans pay 100% but may be 80/20 or 70/30. Read your policy, plan literature or ask your agent for details.

High-risk pool—Most all states have a program in which people who can’t get health insurance from other sources will be able to buy into the state high risk pool. It isn’t a cheap alternative but if you have a serious illness and are denied access to other health insurance plans, this may be an alternative for you.

In-network—This term describes the healthcare providers and facilities which can be utilized in your managed health plan such as your HMO, PPO or POS. Health insurance companies have a pre-arranged price for services when you use one of these providers or facilities. Your cost will be much higher if you decide to go out of the network.

Indemnity insurance—A more traditional coverage that is referred to as “fee for service” health insurance. With this type of plan, you can usually use any provider you choose because the insurance company is going to pay a specified amount for covered medical expenses regardless of where you get the care.

Individual health insurance—Health insurance that a person might purchase which is not part of a group health insurance plan. If you are self-employed or your employer doesn’t offer a group health insurance plan, you can purchase a plan by contacting a licensed agent or an insurance company directly.

Managed care—HMOs, PPOs, and POS plans are all a type of “managed care” plans. These plans have a network of hospitals, physicians and other healthcare professionals who participate in the network. Managed care plans can save you money because they require you to see one of the providers in the network in which the insurance company has pre-arranged agreements as to how much they will pay for any given service.

Network —Term referring to the group of medical providers including hospitals, physicians and others who have agreed to participate in some type of managed care plan.

POS (Point-of-service plan)—This type of managed care plan features more flexibility in choosing doctors and hospitals than an HMO but the primary care physician still coordinates patient care.

PPO (Preferred provider organization)—Also has more flexibility than an HMO in choosing physicians and providers. You can utilize providers in the network and those outside the network although if you do choose to go outside the network, it will cost you more.

Premium—The cost or amount you pay for a health insurance plan. You can usually pay monthly, quarterly or yearly.

Primary care physician—The medical professional that is your first point of contact in the healthcare system. It is usually a family doctor, paediatrician, internist or OBGYN. If you are participating in a managed care plan such as a PPO, HMO or POS, they will be the people responsible for giving you a referral to see a specialist.

Reasonable and customary charge—This term is used to describe the “prevailing” cost of any particular medical treatment or medical service for a particular geographic area. Knee surgery may cost much more in New York City than it does in New Orleans so therefore the “reasonable and customary charges” will be more in New York City.